GoldStockBull subscribers know that gold mining stocks have done quite well in recent months. But companies that have recently found bonanza-grade gold have upside potential above and beyond that of their peers.
2019 is proving to be a great year for gold. As COMEX Gold consolidates above $1,400 and now even $1,450, it's clear that the six-year bear market has come to an end.
In fact, when measured against some fiat currencies, including the Australian dollar (AUD), gold has even reached all-time record highs!
What about gold mining stocks that offer significant leverage at times like these?
In this article, we look at two gold mining companies that have recently discovered "bonanza-grade gold intercepts." What does that mean?
Bonanza Grade Gold Definition
As an investor, it's crucial to keep an eye out for the latest news about the companies you hold shares in. Most trading platforms make this easy by showing links to the latest press releases put out by companies in your portfolio.
But there's a problem. The press releases of mining companies often contain industrial jargon that investors may not understand. One example is the term "bonanza-grade gold."
Grade refers to the extent of mineralization of a deposit of metal ore. The higher the grade, the more gold there is inside a smaller space of rock.
Miners want large deposits of higher-grade ore because it makes their operations more efficient. Higher-grade deposits yield more gold while requiring less work. Discovering a deposit of bonanza-grade gold is rare and bodes well for the future of a junior miner.
The World Gold Council defines a high-quality underground mine as having a gold ore density between 8 and 10 g/t (grams per ton), while a low-quality underground mine has a gold ore density of 1 to 4 g/t. Some view bonanza-grade as more than 34 grams of gold per tonne or more than one troy ounce of gold per ton.
Put another way. . .it means big profits if it is discovered in large quantities. And those profits will be passed on to shareholders as the gold explorers move the project into production.
For a good overview and description of this and other mining-related terms not covered here, see this excellent article on Investingnews.com.
Now to the two mining companies that have just discovered bonanza-grade gold recently: Westhaven Ventures Inc. (WHN:TSX.V) and Pure Gold Mining Inc. (PGM:TSX.V).
Pure Gold Discovers Bonanza-Grade Gold
Pure Gold is a Canadian company that is "100% focused on the goal of developing Canada's next gold mine in the Red Lake district of northern Ontario." The Red Lake district is one of the premier gold-producing areas of Canada, with over 29 million ounces of gold being mined there to date.
The PGM team published a feasibility study in February that outlined profitable prospects for the Madsen Red Lake Gold Project. And that study assumed a gold price of 1,275 USD per ounce!
From the press release: "This first round of results continues to demonstrate the continuity of our geological model and has reinforced the high-grade nature of both the Wedge deposit and the broader Madsen gold system as a whole," stated Darin Labrenz, President and CEO of Pure Gold.
Labrenz goes on to say how this discovery has been established as part of a related system that is five kilometers in length.
To that end, the release also states this: "The resources at Wedge form a part of a series of genetically and geometrically related high-grade gold zones that span a five-kilometer structural corridor from Madsen to Wedge, with expansive gaps along strike and down plunge that remain highly prospective for additional resource growth."
To clarify, this means that there are empty caverns inside the drilling locations, some of them being horizontal (along the strike) and some of them being vertical (down-plunge). It's not currently known whether or not these empty spaces also contain bonanza-grade gold, but that is a firm possibility.
Westhaven Discovers Bonanza Grade Gold
Westhaven Ventures holds the single largest claim of land on the Spences Bridge Gold Belt (SBGB) in Vancouver, British Columbia. The SBGB is underexplored and in close proximity to existing infrastructure, meaning exploration costs are low and potential mining rewards are high. The company has three big projects—Prospect Valley, Shovelnose, and Skoonka Creek.
Given recent bonanza-grade gold intercepts at the Shovelnose operation, the company's activities look promising indeed.
The most notable takeaway from their recent press release is this: "Hole SN19-11 returned 2.98m of 176.33 g/t Au and 131.43 g/t Ag, including 1.00m of 521 g/t Au and 381 g/t Ag in Vein Zone 1."
Translation: In this drill of about three meters, one-third of it was bonanza-grade gold and silver, with concentrations over 50x and 30x what miners consider high grade,respectively.
Other strikes included high-grade and bonanza-grade intercepts at depths of anywhere from 17 to 52 meters. All of these occurred in Vein 2, in the South Zone of the Shovelnose operation, which the company plans on expanding in light of these findings.
These Recent Finds Equal Big Investment Potential
Both of these companies increased their odds of moving their respective projects into production as a result of discovering these unusually high-grade deposits. It also suggests that they selected prime locations for their operations, where additional bonanzas may be waiting to be found. And eventually, it means their economic studies will return more favorable numbers and their profit margins will be higher than previously expected.
Combine all of that with the price of gold breaking out against all fiat currencies in 2019, and it's hard to see a scenario where these miners don't do exceptionally well.
At Gold Stock Bull, we focus on identifying undervalued junior gold miners with high-grade projects that have yet to be fully appreciated by the wider market. The GSB portfolio has posted very strong gains in 2019 and we believe the best is yet to come.
We just added a new junior gold company to our watch list that hit bonanza-grade gold recently and has attracted investment capital from some of the brightest names in the industry. This company has a market cap of around $100 million, but the share price has huge upside as gold moves to $1,500 and higher. We think this could be a five-bagger for those that buy early!
Subscribe to the GSB investment newsletter today to receive in-depth market insights, technical and fundamental analysis, and real-time trade alerts from Jason Hamlin. We believe the subscription will pay for itself many times over within the first year.
Brian Nibley is a freelance writer based out of California. He specializes in topics relating to cryptocurrency and blockchain technology, finance, and marketing. Visit his portfolio at bdncontent.com, his blog at Bnibley.blogspot.com, and connect on LinkedIn at linkedin.com/in/bdncontent.
Note: An earlier version of this article mentioned Pure Gold's Preliminary Economic Assessment for the Madsen Red Lake Gold project, but that has been changed to a Feasibility Study.
[NLINSERT]Disclaimer: Gold Stock Bull holds the companies mentioned in the GSB model portfolio/watch list and Jason Hamlin also owns shares. Brian Nibley does not own shares of the companies mentioned. This is not a recommendation to invest, please perform your own due diligence.
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